|
Editor's Note: Below is a brief excerpt from a complimentary research note written by our Consumables analysts Howard Penney and Daniel Biolsi. Check out our Sector Pro Product Consumables Pro. |
California ends independent trucking in the state (7/5)
The Supreme Court decided not to hear the California Trucking Association’s case against Assembly Bill 5 (AB5). AB5, better known as the “gig worker bill,” will end the owner-operator model in the trucking industry in the state.
There are 70,000 owner-operators in the state. AB5 will have an impact on the entire industry even though it is not a federal regulation due to California’s outsized presence in the logistics industry. Unions are proponents of the bill because they expect to unionize the new employees.
The full impact of the bill is uncertain. AB5’s immediate impact will be on owner-operators that work exclusively for one carrier, but it may be applied more broadly.
Owner-operators own their own trucks and have chosen to be small business owners rather than employees.
In response, independent operators may pivot to become freight forwarders or simply not carry outbound freight from the state. Any reduction in the supply of truckers will lead to upward pressure on rates.
California plastics bill Passes (7/6)
California passed legislation last week that seeks to increase plastics recycling and reduce single-use packaging. Plastic manufacturers will be required to collect $500M annually to fund the recycling program.
Under the bill, plastic producers would have to reduce the plastic in single-use products by 10% by 2027, increasing to 25% by 2032. At that point, plastic will have to be recycled at a rate of 65% compared to less than 5% now.
The bill also addresses numerous hurdles to recycling, including exporting plastic waste and limiting the items that can feature the resin identification code (the small number circled by arrows on the bottom of plastic products). The authors of the bill understood that many plastics can be feasibly recycled, but in reality, rarely are. Plastic beverage bottles have their own recycling rules and were not included.
Styrofoam food packaging is not banned, but it will be required to be recycled at a 30% rate by 2028. Since Styrofoam is very difficult to recycle it could end up as a de facto ban. California’s law will impact more than just the state.
Expect manufacturers to switch to other materials like cardboard, aluminum, and glass or to make their products refillable (like laundry detergent). Plastic is ubiquitous for several reasons, including being the lowest cost. The bill will add to future packaging costs.
